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Taylor v. Wilson10/6/2005
This is an interlocutory appeal from the denial of a motion to compel arbitration. Appellants, attorney Dennis Taylor and the law firm of Shepherd, Smith, & Bebel, P.C., seek relief from the trial court's denial of their motion to compel arbitration of Valerie Wilson's claim for legal malpractice. Appellants' brief asserts two issues: (1) whether a suit for legal malpractice is a claim for "personal injury" under Texas Civil Practice and Remedies Code section 171.002(a)(3); and (2) if so, whether the claim must be compelled to arbitration if it is intertwined with a breach of contract claim. We reverse the trial court's order denying the motion to compel arbitration and remand this cause for further proceedings.
I. Background
In 2002, Valerie Wilson retained appellants as legal counsel to represent her on a claim against an investment firm and its broker. Appellants, on Wilson's behalf, filed a claim in arbitration seeking economic damages arising from breach of contract, deceptive trade practices, breach of securities statutes, misrepresentation, and breach of fiduciary duty. Wilson and appellants entered into a Power of Attorney and Contingent Fee Contract (the "agreement") that contains an agreement to arbitrate disputes. After the arbitration claim was filed, the brokerage firm ceased doing business and claimed financial deficits. As a result, appellants entered into settlement discussions with the brokerage firm and ultimately settled Wilson's claim for $40,000. Wilson contends appellants entered into the binding settlement agreement without her authority and in violation of the agreement.
In 2004, Wilson filed suit against appellants alleging legal malpractice, breach of fiduciary duty, and breach of contract, and seeking fee forfeiture. Appellants moved to compel arbitration pursuant to the agreement, and the trial court denied the motion. Appellants now appeal.
II. DISCUSSION
A party seeking to compel arbitration must establish the existence of a valid, enforceable arbitration agreement and show the claims asserted fall within the scope of that agreement. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). The trial court's determination of the arbitration agreement's validity is a legal question subject to de novo review. Id.
It is undisputed that the parties in this matter entered into an agreement to arbitrate their disputes. On appeal, appellants argue the trial court erred by not compelling Wilson to arbitrate her dispute according to the terms of the agreement.
A. "Personal Injury"
The trial court denied appellants' motion to compel arbitration because it determined Wilson's legal malpractice action was a claim for "personal injury" pursuant to section 171.002(a)(3) of the Texas Arbitration Act. TEX. CIV. PRAC. & REM. CODE ANN. § 171.002(a)(3) (Vernon 2005). The Texas Arbitration Act does not apply to a claim for personal injury unless each party to a claim, on the advice of counsel, agrees to arbitrate in writing, and the agreement is signed by each party and each party's attorney. Id. at § 171.002(a)(3), (c)(1-2) (emphasis added). It is undisputed that the parties did not comply with section 171.002(c)(1-2); therefore, the trial court held the agreement to arbitrate was unenforceable. On appeal, appellants contend the trial court erred because a suit for legal malpractice is not a claim for "personal injury" under the Texas Arbitration Act.
B. Miller v. Brewer, In re Hartigan, and In re Godt
The issue of whether a suit for legal malpractice is a claim for "personal injury" under the Texas Arbitration Act is an issue of first impression
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